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FIRC (Foreign Inward Remittance Certificate)

Ozg Forex Advisory Services

Phone # 0091-98.11.41.58.31-37-61-72-84-92-94

Email: license.consultant@ozg.co.in

Foreign
Inward Remittance Certificate (FIRC) is a document that provides proof
of inward remittance to India. It is treated as documentary evidence by
most of the statutory authorities for confirming the validity of the
foreign money received by the beneficiary.

Purpose

When
a beneficiary receives fund from outside India that will be credited to
his account through an Authorised Dealer only (normally a Bank). (Authorised dealer means
an authorised person by the Reserve Bank of India to deal in foreign
exchange or in foreign securities under the Foreign Exchange Management
Act). If the bank, in which the beneficiary is having his account, is
not an Authorised Dealer, then the money will come to beneficiary’s
account through an Authorised Dealer. Based on the information provided
by the beneficiary upon receipt of money the banker will issue FIRC
stating the purpose of receipt i.e. towards equity investment, advance
against export of services / goods, capital expenditure etc.

Relevance

A few cases where FIRC assumes importance

- In case of Issue of Shares to a foreign entity/person, FIRC is a proof for receipt of share application money.

-
Similarly it is also proof that share purchase consideration has been
received by a resident seller, in case of transfer of shares by a
resident Indian to a non-resident buyer.

-
In case of export of services there is no Service tax to be paid,
subject to Export of Services Rules. Here again FIRC becomes a
documentary proof for exports made and remittances received thereof in
freely convertible foreign exchange.

-
In case of Advance Licence, EPCG etc., FIRC is one of the important
documents to be submitted to DGFT as a proof of export made.

Contents and issue procedure

FIRC normally contains the following details:

- Name of the beneficiary

- Whether the amount is paid by cash or by crediting the beneficiary’s a/c

- Name and address of the remitter

- Name and address of the remitting bank

- DD/TT No/Cheque No

- Foreign currency amount

- Equivalent rupee amount (in figures as well as words)

- In favour of whom the amount has come

- Exchange rate applied

- Purpose of the remittance as stated by beneficiary.

It
is signed by the Authorised signatory of the AD bank and countersigned
by one more person.

As a procedure, this Certificate will come to the
address of the account holder, normally within a period of 15 days from
the date of credit of funds to beneficiary’s account. FIRC must be kept
in safe custody since duplicate will not be issued, if original is lost.

Generally
there is confusion about which bank should issue FIRC in case the
inward remittance has come into the beneficiary’s account through more
than one bank. In practical and as per clarifications
received from 1-2 banks, the first bank that receives the inward
remittance in convertible foreign exchange must issue the FIRC since it
will have the details of the overseas remitting bank.